New York’s Attorney General, Letitia James, is spearheading efforts to recover over $2 million worth of cryptocurrency that was stolen in a remote job scam. The investigation, carried out in collaboration with the U.S. Secret Service and the Queens County District Attorney’s Office, uncovered a well-known scheme where hackers inundated phones with text messages offering fake online job opportunities.
In a lawsuit filed on Thursday, prosecutors detailed the deceptive campaign that lured individuals into purchasing stablecoins, a type of cryptocurrency pegged to fiat currencies like the U.S. dollar. The perpetrators behind the scam, who remain unidentified, used WhatsApp to promise victims payment if they opened a cryptocurrency account, deposited funds, and began reviewing products on fake websites designed to mimic legitimate brands. This fraudulent operation spanned from January 2023 to at least June 2024.
Attorney General Letitia James condemned the exploitation of New Yorkers seeking remote work opportunities to support their families, labeling it as cruel and unacceptable. She emphasized her determination not only to recover the frozen cryptocurrency, with the cooperation of leading stablecoin providers like Tether and Circle, but also to ensure the scammers pay penalties and restitution to the impacted individuals. The lawsuit revealed uncertainties regarding the scammers’ location.
Victims were duped into participating in the scheme under false promises that their product reviews would generate market data leading to increased sales. They were instructed to open accounts on reputable cryptocurrency platforms like Coinbase, Gemini, and Crypto.com to legitimize their reviews through deposited funds. Most victims believed they were making registration deposits that would be returned along with payment for their reviews; however, the scam escalated into a series of escalating deposits with no returns.
One victim cited in the lawsuit incurred substantial financial losses by borrowing money and using credit cards to cover escalating deposits demanded by the scammers. Despite amassing a significant sum in cryptocurrency, the victim was unable to withdraw the funds, as the scammers continuously requested additional deposits under the guise of upgrading the account. This prompted the victim to seek assistance from law enforcement.
The scammers further obfuscated the trail by transferring the purchased cryptocurrency to various digital wallets under their control, complicating efforts to trace the funds. Victims were coerced into sending U.S. dollars through platforms like Wise, with additional fees fabricated by the scammers hindering withdrawal attempts. One victim in New York alone fell prey to the scam, losing over $100,000.
In response to the rampant rise of cryptocurrency-related crimes, New York’s Attorney General’s Office collaborated with Tether and the Queens County District Attorney’s Office to freeze stolen USDT and USDC, respectively. By securing search warrants and working with cryptocurrency firms, the authorities managed to freeze a portion of the illicit funds for potential recovery through legal channels.
In a pioneering move, Attorney General Letitia James announced that her office will employ a non-fungible token (NFT) as a means of notifying the scammers of the litigation. This innovative approach marks a unique strategy to engage with perpetrators and showcase the government’s resolve in combating cybercrimes. Additionally, the Queens District Attorney highlighted a successful partnership with the Secret Service in tracing and freezing the stolen cryptocurrency linked to the scam.
The crackdown on cryptocurrency-related crimes extends beyond New York, as evidenced by Tether’s T3 Financial Crime Unit initiative, which recently froze over $126 million in criminal assets globally. Tether CEO Paolo Ardoino emphasized the collaborative efforts of crypto firms and law enforcement in identifying and halting criminal activities involving digital currencies. The initiative has exposed a range of illicit activities, including investment scams, money laundering, cybercrime, and terrorism financing, underscoring the pervasive threat posed by crypto-related frauds.
Ardoino outlined the process of receiving tips from users to track suspicious activities, leveraging blockchain transparency to trace funds and coordinate with law enforcement agencies worldwide. The T3 initiative’s swift action in freezing illicit funds within days of detection exemplifies the efficacy of industry partnerships in combatting financial crimes.
Moreover, blockchain companies like Chainalysis have joined forces with law enforcement agencies to tackle cryptocurrency scams, leading to successful freezes and seizures of funds. The collaborative efforts between private firms, regulatory bodies, and investigative authorities signify a concerted approach to safeguarding investors and curbing illicit activities within the burgeoning crypto landscape.
As the battle against crypto scams intensifies, coordinated efforts between industry players, government agencies, and international partners will be vital in preserving the integrity of digital assets and protecting individuals from fraudulent schemes. The comprehensive actions taken by New York’s Attorney General’s Office, alongside the innovative strategies implemented, signal a firm resolve to hold perpetrators accountable and uphold the trust of cryptocurrency users in the evolving financial landscape.